Unemployment Through Learning from Experience
Part of the International Economic Association Series book series (IEA)
This paper analyses how workers’ wage claims can serve as a learning tool. We argue that when workers have some market power and face substantial uncertainty in the labour market, it may be in their interests to formulate their wage claims with a view to the information thereby revealed, in order to make more informed wage claims in the future. This learning behaviour can have an important by-product: unemployment. Our analysis shows how the process of information acquisition through wage claims generates:
rates of youth unemployment and long-term unemployment that are higher;
dismissal probabilities for incumbent workers that are lower than would otherwise be the case.
KeywordsUnemployment Rate Learn Model Young Worker Transfer Payment Uncertainty Interval
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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© International Economic Association 1991